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Stifel, a financial services firm, increased the price target for Blackbaud (NASDAQ: NASDAQ:BLKB) shares to $85 from the previous $80 while keeping a Hold rating on the stock.
The adjustment follows Stifel's attendance at Blackbaud's annual customer conference, bbcon, which took place in Seattle this week.
During the conference, Blackbaud was recognized as a market leader in a sector with limited competition. However, some attendees noted that while the company's core functionality has seen little change over time, there is anticipation for the new features slated for release in 2025.
Stifel's analyst believes that Blackbaud's ongoing investment in innovation is crucial to counteract the perception of stagnation and to make the most of its yearly price increases.
The firm also noted that Blackbaud is expected to complete its pricing roll-out by 2026. Stifel is looking at the company's gross retention rates and its success in cross-selling as indicators of Blackbaud's ability to deliver innovation and value to its customers.
The expectation is that these metrics will demonstrate whether the company can effectively capitalize on its investment in modernizing its platform.
The analyst emphasized on the importance of Blackbaud's innovation efforts: "We believe Blackbaud has and will continue to emphasize investments in innovations to offset this narrative. With many new features expected to roll out in 2025, we believe it is important for the company to capitalize on these investments and modernize its platform in response to its annual price escalators."
In other recent news, Blackbaud reported robust financial results for the second quarter, with an 8% increase in total revenue. This growth was primarily driven by an 8.5% rise in its core social sector. Despite this, the company's corporate sector faced challenges due to underperformance from EVERFI, leading Blackbaud to consider strategic options for EVERFI, including a possible sale.
Baird, after attending Blackbaud's user conference, maintained its Outperform rating on the company's stock. This rating reflected Baird's confidence in Blackbaud's market position and financial prospects, backed by positive customer feedback and successful price increases. However, Baird also noted that Blackbaud needs to continue to effectively execute its cross-selling strategy to maintain momentum.
Blackbaud remains committed to enhancing shareholder value through aggressive stock repurchases and maintaining its operating plan. The company reported a significant increase in free cash flow and a robust EBITDA margin of 36%.
InvestingPro Insights
Following Stifel's recent price target increase for Blackbaud, Inc., InvestingPro data and tips offer further insights into the company's financial health and market performance. Blackbaud, with a market capitalization of approximately $4.23 billion, is trading at a forward P/E ratio of 56.2, which indicates investors' expectations of future earnings growth. The company's revenue has grown by 6.58% over the last twelve months as of Q2 2024, showcasing its ability to expand its financial base in a competitive market.
Moreover, InvestingPro Tips highlight that Blackbaud's management has been actively buying back shares, a sign of confidence in the company's value. Additionally, analysts expect net income growth this year, which could provide a positive outlook for investors. However, it's worth noting that four analysts have revised their earnings downwards for the upcoming period, suggesting some caution may be warranted.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available on Blackbaud, which can be found at https://www.investing.com/pro/BLKB. These tips could provide valuable information for those considering an investment in the company.
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